Tracking developments in the Russian military

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Mistral negotiations claim an admiral

Despite my best efforts, I can’t seem to get away from the Russian Navy these last couple of weeks. Just when I was about to move on to the air force, I got an email from a colleague doing a study of the Mistral sale who points out that negotiations have hit a snag over price disagreements. More specifically, the issue is that the Russian side expected to get the two ships for 980 million euros, while the signed agreement is actually for 1.15 billion euros. The difference consists of 131 million for logistics and 39 million for crew training.

The hangup is that Vice Admiral Borisov, the deputy commander in chief of the navy for armaments and one of the lead negotiators for the Mistral contract, signed a protocol back in December that included these two extra items, without clearing the price increase with Rosoboronexport back home. Doing so very much exceeded his authority. As a result, Borisov is now facing an early retirement (4 years ahead of schedule).

Gazeta.ru cites Ruslan Pukhov’s argument that Borisov’s removal will allow both sides to return to the negotiating table to settle the price difference issue. My guess is that this is just a minor roadblock that will be resolved in fairly short order, as both sides have too much invested in the deal to get hung up on a 15 percent price difference. There may be a delay of a month or two in the signing of the final contract, but in the end some compromise will be made and things will get back on track.